Laws of the People's Republic of China

The Ministry of Foreign Trade and Economic Cooperation, the Ministry of Finance, the People's Bank of China

Order of The Ministry of Foreign Trade and Economic Cooperation, the Ministry of Finance, the People's Bank of China

No.6

The Interim Provisions on Drawing Foreign Capital into the Asset Restructuring and Disposal by Financial Asset Management Companies is hereby promulgated, and come into force as of the date of promulgation.

Minister of the Ministry of Foreign Trade and Economic Cooperation: Shi Guangsheng

Minister of the Ministry of Finance Xiang Huaicheng

President of the People's Bank of China Dai Xianglong

October 26, 2001

Interim Provisions on Drawing Foreign Capital into the Asset Restructuring and Disposal by Financial Asset Management Companies

Article 1

These provisions are formulated according to the laws of our country concerning foreign investment, to the Rules for Financial Asset Management Companies, and to relevant regulations, with a view to standardizing activities of drawing foreign capital into the asset restructuring and disposal of financial asset management companies (hereinafter referred to as asset management companies for short), and to protecting the lawful rights and interests of both Chinese and foreign investors.

Article 2

Asset Management Companies may restructure and dispose of the assets they possess by way of drawing foreign capital.

Article 3

Drawing foreign capital into the asset restructuring and disposal shall stand at the point of national economy strategic adjustment, by way of drawing foreign capital to activate bad assets, of introducing advanced managerial skills, assets and technique, and of conducting technique innovation within the enterprises, to promote the reform of state-owned enterprises and the establishment of modern enterprise system. Those short-term transactions aimed only at asset speculations and debt evasion of enterprises shall be prevented and avoided.

Article 4

Drawing foreign capital into asset restructuring and disposal by asset management companies shall conform to state industrial policies supervising the foreign investment. Those foreign-investment-forbidden fields in culture,finance,insurance and in the Guide Catalog for Foreign-Invested Industries shall not be included in the scope of drawing foreign capital into asset restructuring and disposal. Those projects that must be held by the Chinese side according to the provisions in the Guide Catalog for Foreign-Invested Industries shall, as a general rule, be kept under the control of the Chinese side after foreign capital is drawn into the asset restructuring.

Article 5

Scope of Assets Restructured and Disposed

(1)

The enterprise stock rights owned by asset management companies include: stock rights obtained by asset management companies through debt-to-equity swap, stock rights possessed by asset management companies after the debt enterprise being restructured, and stock rights possessed by asset management companies by other means;

(2)

The physical assets of enterprises on which asset management companies have right to dispose of;

(3)

The creditor's rights of enterprises owned by asset management companies.

Article 6

Mode of Asset restructuring and Disposal

(1)

Asset management companies restructure the non-listed companies' stock rights and creditor's rights they owned, and then sell or transfer them to foreign merchants;

(2)

Asset management companies directly sell or transfer the non-listed companies' stock rights and creditor's rights they owned to foreign merchants;

(3)

Asset management companies transfer physical assets they owned to foreign merchants through transfer agreements, public bidding, auction and so on;

(4)

Asset management companies evaluate the enterprise stock rights and physical assets they owned and invest them as financial contribution to establish an enterprise with foreign investment, on the basis of the former enterprise, with foreign merchants.

Article 7

When restructuring and disposing of the assets of an enterprise, asset management companies shall consult with other investors, who shall have the preemption on an equal footing.

Article 8

Evaluation and Transaction Value of Assets Restructured and Disposed Assets restructured and disposed by asset management companies shall be evaluated by competent asset evaluation institutions before being sold or transferred. Various conditions of asset restructuring and disposal shall be taken into consideration in the asset evaluation. Asset evaluation shall conform to international conventions, and shall adopt currently accepted means in the international community.

Asset management companies shall have the right to determine independently the transaction value of assets restructured and disposed, according to relevant provisions in the Regulatory Measures of the Ministry of Finance on Asset Disposal of Financial Asset Management Companies and considering comprehensively the asset evaluation net value, the asset increment potential, the asset status in quo and so on.

Article 9

Procedure of Asset restructuring and Disposal

(1)

According to relevant provisions of the Regulatory Measures of the Ministry of Finance on Asset Disposal of Financial Asset Management Companies, asset management companies shall appoint specialized verification institutions of asset disposal to examine and approve asset restructuring and disposal plans. If assets to be restructured and disposed fall into the limitative scope of the Guide Catalog for Foreign-Invested Industries, asset management companies shall ask for permission of competent authorities before approving the restructuring and disposal plan.

(2)

Asset management companies shall sign relevant legal documents with foreign merchants according to approved plans for asset restructuring and disposal.

(3)

Asset management companies shall apply to the Ministry of Foreign Trade and Economy for going through relevant procedure to establish enterprises with foreign investment according to law, and shall take out the certificate of approval.

Article 10

Cooperation of asset restructuring and disposal between asset management companies and investors from Hong Kong, Marco and Taiwan shall be carried on by reference of these provisions.